It certainly shouldn't
be an 8% return
, because Social Security is intended to be "actuarially neutral." I believe that to a rough approximation it is. You shouldn't be getting any 8% "return," you merely have concentrated about the same number of dollars into a shorter time period.
I keep hearing that 8% round number and I suspect it is not any kind of "return" at all, but the "credit for each year of delayed retirement after NRA (percent)." See more at the end.
So the net present value of future benefits and internal rate of return and so forth are supposed
to be about the same.
People who don't believe in acting on the basis of rough approximations always challenge this, on the basis of innumerable details, e.g. the benefits are unisex but women have longer life expectancy, therefore, for any detailed calculation X the numbers will come out quite a bit different for men and for women (and spousal benefit yadda yadda). But the numbers all depend on assumptions and predicitions that can't be estimated all that reliably.
The elephant in the room is that the SSA says that
(if congress takes no action), after about 2035 the trust fund(s) will be exhausted and taxes will only be able to pay about 79% of scheduled benefits. It actually says something like this on every annual Social Security statement. Regardless of what one might think about what Congress might or might not do, any calculation of the any Social Security claiming strategy needs to take this elephant into account somehow--e.g. doing the calculations both assuming no change in benefits and assuming a 20% cut in 2035.
To be clear, bobcat2 who has posted on this a number of times has said emphatically that delaying filing is
beneficial, even assuming that possible cut.
A retirement strategy has a lot of moving parts to it. You will hopefully be spending money all through ages 62-70, so it is always a comparison
between getting it from Social Security and getting it from somewhere else.
P.S. Social Security itself
has material on this, which shouldn't be ignored completely. They say:
What's the best time to start your retirement benefits? We're not recommending that you start at age 62, your full retirement age, age 70, or any age in between. Here's some additional information that may help you decide what's right for you...
Honestly, I don't think they would say that if it were no-brainer that everybody would benefit immensely by waiting until 70. They provide various (fairly shallow) tools and analyses, including a table
that "illustrates the complex interaction among normal retirement age, actuarial reduction, and delayed retirement credit."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.